Gold climbs above $1470 as risk-aversion retakes control of markets

• Risk-on atmosphere continues to fade away in American session.
• 10-year US Treasury bond yield erases majority of Tuesday's gains.
• US Dollar Index loses traction, returns to 97.50 area.

After gaining nearly $35 on Monday and touching its highest level in more than six years at $1475, the troy ounce of the precious metal retraced a small portion of its rally but reversed its course in the last few hours to, once again, rise beyond the $1470 mark. As of writing, the XAU/USD pair was up 0.65% on the day at $1473.60.

Although it looked like the market sentiment was turning positive earlier in the day, the lack of any fundamental developments that could ease concerns over the US-China trade conflict made it difficult for the risk-sensitive assets to continue to find demand. 

Investors continue to seek refuge

The 10-year US Treasury bond yield, which gained as much as 1.5% earlier in the day, turned south and erased almost all of its gains to confirm the souring mood. Additionally, Germany's DAX failed to stay in the positive territory and fell sharply into the negative territory while Wall Street's main indexes retraced the opening gains. 

Furthermore, falling Treasury bond yields weighed on the greenback and caused the US Dollar Index (DXY) to pull away from the daily high it set at 97.77, providing additional support to the pair. At the moment, the DXY is still up 0.15% on the day at 97.54. The only data from the US today showed that the Investor's Business Daily's Economic Optimism Index fell to 55.1 in August from 56.6 in July but came in slightly better than the market expectation of 54.6.

There won't be any other macroeconomic data releases from the US in the remainder of the day and the market's risk-perception is likely to continue to drive the pair's action.

Technical levels to watch for